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Dowtheory

Does Anyone Remember Charles Dow?Something interesting happened with the Dow Jones Transportation Average recently. Or, more precisely, didn’t happen. The S&P 500, Nasdaq-100 and Dow Jones Industrial Average all breached their October lows amid this year’s pullbacks. But Transports haven’t even come close to those levels. Notice how DJT bottomed last week over 14,000. That was 1 percent above its trough near the end of the third quarter and start of the fourth quarter. Turn back the clock a little further to the late 1800s, when Charles Dow famously noticed that railroads and shipping stocks could confirm moves in the broader market. In the current case, “Dow Theory” may be providing non-confirmation of weakness . And that could be bullish. Second, consider the converging trendlines as DJT eased lower. Is that a falling wedge, another potentially bullish reversal pattern? Finally, you have the bigger picture because Transports are a classically cyclical part of the market that often benefit from a strong economy . With Covid cases falling, the U.S. reopening and the spring/summer approaching, investors may view Transports as a potential beneficiary. TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
DJ:DJT
by TradeStation
2
SPX: Buy amid panic? Let's see...Hello traders and investors! Let’s see how the SPX is doing today! First, in the 1h chart, it lost the support level we mentioned yesterday, however, it seems it just dropped to its next support, and now we see a very good reaction. In the 1h chart, the index filled the previous gap, making it an Exhaustion Gap, and it is triggering a pivot point as well. These are signs of bullish reversal, but the situation is still very dangerous. The index is still under its 21 ema, and it seems it needs more bullish structures to confirm a true short/mid-term reversal. If this happens, the gap at 4,472 would be its next target. When we look at the daily chart, we see a powerful candlestick today, closing above the last two support levels, and this is another bullish sign. The volume is starting to increase again too, and this is important. Remember, the volume must confirm the trend (Dow Theory 5th tenet). Since I always had this contrarian style, when I see movements like this, or when I see people panicking, usually I find the best opportunities around. As Nathan Rothschild once said: "But when there’s blood in the streets". Use the emotional traders and investors in your favor. However, we must do this calmly, with caution, and using a proven methodology. Personally, I see many amazing opportunities right now. I’ll keep you guys updated every day on this, so, remember to follow me to keep in touch with my daily updates.
SP:SPX
by Nathan_The_Finance_Hydra
2
S&P 500 Reclaims the Trend LineThe S&P 500 broke a 10-month uptrend about seven weeks ago. Now it may be trying to reclaim that line. This chart updates some patterns from our September 24 idea . The rising wedge pattern was bearish at the time – not a surprise given fears about inflation, the delta variant and a tapering Fed. But those forces have played out and investors are more focused on strong earnings and the improving economy. Speaking of the economy, a key sector that tracks the business cycle just broke out: Transports . The Avis Budget short squeeze may have triggered the last surge, but other parts of the index like railroads and truckers were already rallying. This provides potential “Dow Theory” confirmation to the broader market’s new highs. Returning to SPX, another interesting chart pattern is the price action in late October. Notice how quickly pullbacks were bought on October 22 and 27. These bounces also occurred near the September peaks, which suggests old resistance became new support. Finally, consider VIX’s close at 15.09 yesterday – its third lowest close since coronavirus slammed the market in late February 2020. Also notice its lower high and quick rejection around 17 this week. This key metric refused to “return to normal” during the entire pandemic. But now that the Fed is tapering, it may be time for the fear index to get less fearful. If that does happen, it could instill more confidence and spur more risk taking. So while the market has run a lot and bounced sharply, there may still be reasons to think the move will continue. TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
SP:SPX
by TradeStation
PLTR: Just filled a gap! What's next?Hello traders and investors! Let’s see how PLTR is doing today! We had a Red Monday yesterday, and PLTR crashed along with the rest of the market. Now, what’s for us here? First, let’s keep in mind that PLTR just filled its gap at $ 23.19, and now we have the beginning of a bullish reaction. This candlestick pattern could be a Harami, which is not the best reversal pattern, I agree, but since it is near such a good support level, the odds of a reversal increases dramatically. In addition, PLTR has been dropping since Sep 24, but the volume was below the average. This is another sign that PLTR has been dropping just because it has been following the market. We still don’t see any meaningful bearish structure that could sustain this drop for too long. In fact, there’s a good chance that we just hit the bottom for now. What we must see is a clearer bullish structure in the 1h chart: If PLTR closes above the previous support level at $ 23.67, it’ll be a good sign, but what we really must see is a bullish structure. So far, PLTR has been doing lower highs/lows, and as Dow would say: Trends persist until a clear reversal occurs. This week is going to be decisive on PLTR, and if you liked this analysis, remember to follow me to keep in touch with my daily updates. Have a good day!
NYSE:PLTR
by Nathan_The_Finance_Hydra
5
💡🎓 Dow Theory & Bitcoin 🎓💡To share awareness for the beauty and history of our art of Technical Analysis of financial markets, in this educational post, I look at the six fundamental principles of Dow Theory, applied to Bitcoin and its current macro/local trends. Dow Theory Principles; 1. Markets Discount Everything 2. The Market has 3 Trends 3. Major Trends have 3 Phases 4. Markets must Confirm Each Other 5. Volume must confirm the Trend 6. A trend is assumed to be in effect until is shows clear signals it has reversed [Below is a summary of who Charles H. Dow was and his impact, by John J. Murphy; “ Charles Dow and his partner Edward Jones founded Dow Jones & Company in 1882. Most technicians and students of the markets concur that much of what we call technical analysis today has its origins in theories first proposed by Dow around the turn of the century. Dow published his ideas in a series of editorials he wrote for the Wall Street Journal. Most technicians today recognize and assimilate Dow's basic ideas, whether or not they recognize the source. Dow Theory still forms the cornerstone of the study of technical analysis, even in the face of today's sophisticated computer technology, and the proliferation of newer and supposedly better technical indicators. On July 3, 1884, Dow published the first stock market average composed of the closing prices of eleven stocks: nine railroad companies and two manufacturing firms. Dow felt that these eleven stocks provided a good indication of the economic health of the country. In 1897, Dow determined that two separate indices would better represent that health, and created a 12 stock industrial index and a 20 stock rail index. By 1928 the industrial index had grown to include 30 stocks, the number at which stands today. The editors of The Wall Street Journal have updated the list numerous times in the ensuing years, adding a utility index in 1929. In 1984, the year that marked the one hundredth anniversary of Dow's first publication, the Market Technicians Association presented a Gorham-silver bowl to Dow Jones & Co. According to the MTA, the award recognized "the lasting contrbution that Charles Dow made to the field of investment analysis. His index, the forerunner of what today is regarded as the leading barometer of stock market activity, remains a vital tool for market technicians 80 years after his death. Unfortunately for us, Dow never wrote a book on his theory. Instead, he set down his ideas of stock market behavior in a series of editorials that The Wall Street Journal published around the turn of the century. In 1903, the year after Dow's death, S.A Nelson compiled these essays into a book entitled The ABC of Stock Speculation. In that work, Nelson first coined the term "Dow's Theory." Richard Russell, who wrote the introduction to a 1978 reprint, compared Dow's contribution to stock market theory with Freud's contribution to psychiatry. In 1922, William Peter Hamilton (Dow's associate and successor at the Journal) categorized and published Dow's tenets in a book entitled The Stock Market Barometer. Robert Rhea developed the theory even furtherIn the Dow Theory (New York: Barron's), published in 1932. Dow applied his theoretical work to the stock market averages that he created; namely the Industrials and the Rails. However, most of his analytical ideas apply equally well to all market averages. “ John J. Murphy, Technical Analysis for the Financial Markets, 1999, Page 23-24 What are your thoughts? yemala
COINBASE:BTCUSDEducation
by Yemala
7
SPX: The bulls won once again!Hello traders and investors! Let’s see how the SPX is doing today! We are in a very strong bull trend, as usual, and the index is just retesting its supports before it jumps again. We have been saying this for a very long time now, and since we apply Dow Theory in our methodology, we know that trends persist until a clear reversal occurs (Dow Theory, 6th tenet). As long as we don’t see any reversal around, there’s nothing to do, but buy when it does a pullback. Thanks to this strategy, we nailed every single movement on SPX since last year. Now what’s for us here? The index is far from the 21 ema and we have no bullish pattern around. We don’t have any bearish sign either, but this only makes me neutral on the index. If we drop, the 21 ema and the 4,501 are support levels for us to work with in the short-term. In the mid-term the 4,480 is still a nice support, which is above the 21 ema. Technically, the index could drop to the purple trendline, and the trend would still be bullish , and for this to happen, we must see a strong bearish structure in the 1h chart first. But again, I don’t see it as a buy because the risk/reward ratio is not the best, and I always like to buy near support levels, like when the index did this fantastic Piercing Line candlestick pattern just above the purple line. We buy in moments like this, not right now. Some individual stocks are looking much better, and if you know where to look, you’ll find some undiscovered gems around. If the index drop, probably it’ll create even more opportunities. If you’ve read this far, remember to follow me to keep in touch with my daily updates, and please, support this idea if you liked it! Have a good week.
SP:SPX
by Nathan_The_Finance_Hydra
3